Government Contractor Spends $1 Million On Parties And Perks

An investigative report by The Washington Post uncovered massive fraud, waste and abuse by the largest nonprofit contractor working for the U.S. Agency for International Development (USAID). It appears that International Relief and Development (IRD), based in Arlington, Va., collected hundreds of millions of federal dollars, ostensibly for relief work in war zones in Iraq and Afghanistan and projects in impoverished nations. However, records reveal that between 2007 and 2010 the company spent an estimated $1.1 million on expensive “retreats” and perks for employees and executives.

Rules for federal contractors do allow parties and retreats as part of an organization’s overhead costs, but the money must be used for training staff and building morale. IRD booked retreats at posh, pricey resorts and treated themselves and staff to fancy dinner parties and open bars – specifically not allowable under federal contractor rules – and gifts including iPods customized with the organization’s name, cameras, special recreational classes and activities, and even gift certificates for personal employee spending.

In an investigative piece published in May 2014, the Post reports IRD was started in 1998 by a minister and his wife as an outreach mission to help war victims in Bosnia-Herzegovina. However, after the U.S. became involved in the wars in Iraq and Afghanistan, IRD contracts increased exponentially, with annual revenue growing from $1.2 million to $706 million, mostly from USAID. In fact, the Post reports, “IRD has received more grants and cooperative agreements from USAID in recent years than any other nonprofit relief and development organization” to the tune of about $1.9 billion. Employees were paid million-dollar salaries and generous bonuses. Many former USAID employees left their positions with the federal agency and accepted lucrative positions with IRD.

Since 2007, IRD received 82 percent of its nearly $2.4 billion operating budget from USAID for projects in Iraq and Afghanistan. John E. Bennett, a former career State Department official and ambassador who led a team in Baghdad that worked with IRD told the Post, “IRD is a nonprofit in name only. They built an organization designed to get USAID money.”

Current and former officials with IRD insist they are doing good work in a dangerous situation. Programs include cleanup projects, agricultural programs and other humanitarian aid. However, critics of the program say money pours in but is largely diverted or, at best, mismanaged. The Post noted IRD programs with USAID were often run under “cooperative agreements” rather than contracts, giving the contractor more flexibility and also requiring less oversight from the federal agency. These types of agreements can be easily changed to add cost to taxpayers and make it difficult to hold contractors accountable because deadlines and specific deliverables are seldom outlined, the Post reports.

Following on the heels of the May investigative report, IRD founders Arthur Keys and his wife, Jasna Basaric-Keys retired from the non-profit last summer. In January, USAID suspended IRD from receiving any more federal work, citing concerns about “serious misconduct.” IRD revenue from USAID dropped from $587 million in 2010 to $78 million last year. USAID spokesman Ben Edwards told the Post in a statement:

Waste, fraud, and abuse of American taxpayer funds are completely unacceptable and USAID is taking every measure at our disposal to recover misspent funds. The Agency suspended International Relief and Development in January from receiving U.S. Government awards based on our ongoing review of IRD’s performance, management, and financial controls.

IRD’s new chief executive, Roger Irvin, says he is working to streamline the company’s finances and is working with investigations launched by the inspectors general for USAID, the State Department, and the Special Inspector General for Afghanistan Reconstruction.